By Hannah Lang

WASHINGTON (Reuters) – The greenback was set for a 3rd straight weekly achieve on Friday, as markets raised bets on higher-for-longer rates of interest and amid intently watched last-ditch talks on the U.S. debt ceiling.

Obvious progress within the talks between President Joe Biden and prime congressional Republican Kevin McCarthy helped ease investor jitters, however doubts remained about when each side would attain settlement.

Biden and McCarthy are closing in on a deal that might increase the federal government’s $31.4 trillion debt ceiling for 2 years whereas capping spending on most objects, a U.S. official informed Reuters forward of an extended vacation weekend within the U.S. However an administration official briefed on the talks warned that “main points” remained.

The , which tracks the forex towards six main counterparts, was final down 0.038% on the day at 104.170%.

“There’s some optimistic vibes or not less than optimistic undertones to the debt ceiling talks during the last 24 hours or so,” mentioned Bipan Rai, North America head of FX Technique at CIBC Capital Markets.

“I feel definitely in the case of the FX market, that is reverberating through some extent of greenback defensive habits towards a number of the extra high-risk currencies,” he mentioned.

The greenback’s latest momentum has additionally been pushed by raised expectations that the Federal Reserve should preserve rates of interest increased for longer to subdue inflation.

U.S. client spending elevated greater than anticipated in April, leaping 0.8% final month, the Commerce Division mentioned on Friday, boosting the financial system’s progress prospects for the second quarter.

The private consumption expenditures (PCE) value index elevated 0.4% in April after rising 0.1% in March.

Following the readout, the greenback hit a brand new six-month excessive towards the yen and final stood at 140.60.

“Latest strikes in currencies have been primarily pushed by a pointy repricing of FOMC coverage,” mentioned Carol Kong, a forex strategist at Commonwealth Financial institution of Australia (OTC:) (CBA).

Main European policymakers struck various tones on the longer term path of euro zone inflation on Friday, with European Central Financial institution chief economist Philip Lane pushing again towards issues about core inflation.

“There appears to be much more uncertainty with respect to the ECB and what it is going to do in the case of administering charges over the approaching months,” mentioned Rai.

The euro was final up 0.11% towards the greenback at $1.0731.

Sterling was final buying and selling at $1.2352, up 0.26% on the day, after knowledge confirmed British shoppers picked up spending in April, though the forex was nonetheless heading for a weekly loss.

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Forex bid costs at 2:54PM (1854 GMT)

Description RIC Final U.S. Shut Pct Change YTD Pct Excessive Bid Low Bid

Earlier Change

Session

Greenback index 104.1700 104.2300 -0.04% 0.657% +104.4200 +103.8400

Euro/Greenback $1.0731 $1.0726 +0.05% +0.14% +$1.0759 +$1.0702

Greenback/Yen 140.6000 140.0550 +0.39% +7.24% +140.7200 +139.5000

Euro/Yen 150.87 150.22 +0.43% +7.53% +150.9300 +149.8000

Greenback/Swiss 0.9047 0.9057 -0.08% -2.13% +0.9074 +0.9019

Sterling/Greenback $1.2353 $1.2321 +0.26% +2.14% +$1.2395 +$1.2317

Greenback/Canadian 1.3614 1.3645 -0.22% +0.48% +1.3654 +1.3602

Aussie/Greenback $0.6520 $0.6506 +0.18% -4.39% +$0.6544 +$0.6490

Euro/Swiss 0.9709 0.9713 -0.04% -1.88% +0.9717 +0.9689

Euro/Sterling 0.8685 0.8703 -0.21% -1.80% +0.8710 +0.8678

NZ $0.6045 $0.6062 -0.26% -4.78% +$0.6096 +$0.6034

Greenback/Greenback

Greenback/Norway 11.0800 11.0560 +0.27% +12.96% +11.0990 +10.9840

Euro/Norway 11.8878 11.8432 +0.38% +13.29% +11.9025 +11.8056

Greenback/Sweden 10.8119 10.8240 -0.02% +3.88% +10.8331 +10.7056

Euro/Sweden 11.6031 11.6054 -0.02% +4.07% +11.6184 +11.5124